The opinion
Mellott,
dissenting: The rule applied by this Board and the Circuit Court of Appeals for the Second Circuit (121 Fed. (2d) 1) in the Richardson case seems to me to be inapplicable under the facts *404 before us. In the cited case the settlor’s husband had recently given the property to her. She conveyed the property to him as sole trustee, giving him the power to cancel and terminate the trust at any time and to take the trust corpus free from all trusts. He was given full power and authority in his absolute and uncontrolled discretion to sell or exchange the trust property at any time for such price as he should deem advisable and to reinvest the proceeds in any character of property. It was pointed out that he had complete control of the use of the res and the income therefrom, even to the extent of paying the premiums for life insurance upon the lives of himself and his wife. Holding was made, in which I concurred, that the property and the income were so cleaily subject to his unfettered command that they were, in substance, his.
In the instant proceeding petitioner had not previously owned the property; she is not the sole trustee; and it is obvious that the settlor was motivated primarily by a desire to create special trusts for his children as to four-tenths of the trust estate. The evidence indicates that the provision under which the Board holds that she could just as effectively terminate the trust as could the petitioner in the Richardson case was included in the trust instrument upon the suggestion of the trust officer; that it was adopted only after full understanding of the parties that it was to be used only in an emergency arising out of the income of the trust “evaporating” or decreasing; and that the trustees would not pay out money on a request of petitioner until a finding was made by a court having jurisdiction that a real emergency existed. Although the trust instrument does not contain these restrictions, it appears that the trust has always been operated in accordance with this understanding; that there has been no change in the corporate trustee; that there has been distributed to petitioner only the net income of the trust; and that no part of the corpus has ever been distributed to her.
The trust by its terms is to be construed under, and in accordance with, the laws of Pennsylvania. A cursory examination of the decisions by the courts of that state does not indicate that they would hold that the trust was without substance, that the settlor had made a complete inter vivos gift of the property to his wife, or that she had become owner of the trust res by operation of law. There seems to be no contention by t'he respondent or holding by the majority that capital gains under the laws of Pennsylvania must be included in trust income. They are taxable to the petitioner only in the event that she is the owner of the trust corpus or it is so clearly subject to her unfettered command as to be hers. Being of the opinion that no such conclusion is justified, I respectfully note my dissent.
Arundell, agrees with this dissent.